Real Estate

LA homebuyers feel the heat as prices rise under the California sun


After 18 months of an enforced career break due to the pandemic, Jez Thierry, a director of photography in Los Angeles, is just starting to see his work life return to normal. But when it comes to buying a home in the southern Californian city, it’s anything but.

“I’m a cash buyer and I’ve put offers on six houses in six months, but I’ve been outbid every time. The asking price always feels like a starting point to create a groundswell of competing buyers, and it’s really cowboyish,” says Thierry, 47, who relocated from London to LA in 2005.

“You don’t even get a look-in unless you can close the deal within 30 days. People are selling their property first, then renting it back from their buyer for a few weeks until their own purchase goes through.”

Thierry has just had some luck, though; his $1.225m offer has been accepted on a detached 1,630 sq ft house priced at $960,000 in El Sereno in east LA. “[As a neighbourhood] it’s all right,” he says. “But cross the street and you get a different picture. Properties are going for prices you’d expect for smarter neighbourhoods such as beachside Marina del Rey — and I now couldn’t afford what I could six months ago.”

Lockdowns have driven Angelenos, like many others across the world, to want more space. But unlike those in a lot of global cities, where apartment living is the norm, Angelenos don’t have to go far to find the much sought-after detached house with garage and pool in the backyard. Single-family homes of this type make up about two-thirds of the city’s housing stock, and their median price in August 2021 was $830,070, nearly 20 per cent higher than a year before, according to the California Association of Realtors.

Marina del Rey
Marina del Rey, a charming — and much sought-after — coastal community © Getty Images/iStockphoto

“LA isn’t about vertical living, so it hasn’t seen the same flight to the hills as other cities,” says Jason Mansfield, an associate partner at estate agency Knight Frank. But it also means that competition for single-family homes is intense.

“West of Downtown to the ocean, which is considered the most desirable area, you’ll struggle even to get a starter home for less than $1m,” says Stan Smith, a senior executive manager of sales at estate agency Douglas Elliman. He mentions a house in Beverly Hills that was listed for $2.25m, received 83 offers and has just sold for $4.1m. “Even at the $15m-$20m level in Beverly Hills, houses are seeing seven or eight offers above asking price.”

And asking prices have been increasing rapidly. Last month, the median listing price in Beverly Hills hit a record $5.5m, up 40 per cent on September 2020, according to Realtor.com. The median sale price was $2.9m. James Harris, principal at The Agency — and star of Bravo TV’s Million Dollar Listing Los Angeles — says there were 57 home sales recorded in Beverly Hills in August, up from 28 in August 2019.

Several areas of LA have chalked up big-ticket sales recently. In September, a home in the high-end Brentwood neighbourhood sold for $65m, the priciest on-market deal recorded there this year. In April, a mansion in Santa Monica, a small coastal city in LA County, sold for $48.68m, reportedly the surrounding area’s most expensive yet.

Beverly Park in the Santa Monica Mountains
Hilltop homes in Beverly Park © trekandshoot/Alamy

In this sprawling metropolis — “They call it a city in search of a centre,” says Smith — few areas are escaping the buying frenzy. “The demand for single-family homes is gentrifying older neighbourhoods closer to Downtown such as Leimert Park and West Adams. But that comes with controversy as locals feel they’re being priced out,” Smith says.

It is hoped that two new bills passed by California governor Gavin Newsom will help ease the pressure on housing, however. At present, landowners can only build one house — and one associated unit, such as a converted garage — on a single-family-home plot, which has contributed to LA’s chronic housing shortage.

But from January, when the new SB9 zoning bill takes effect, homeowners will be allowed to divide their plot in two and build two properties on each. “The SB10 bill comes into play at the same time, which the City can enact to allow up to 10 units on one lot. It will either be a boom for housing — or a boom for speculators. But [in any case] it won’t happen overnight,” says Smith.

Until then, more affluent Angelenos are considering vertical living, with new high-end branded developments such as Pendry Residences and The Edition, both in West Hollywood, tempting wealthy condo buyers with their hotel-style amenities and services.

“These developments are encouraging people to look at more central LA locations, close to the best dining, shopping and entertainment on Sunset Strip. After a year of being hunkered down, people want that vibrant, social urban experience again,” says Erika Alm, principal at PowerPlay Destination Properties. LA’s highest-priced condo sale has also been recorded at Pendry, with a $13.3m unit closing at more than $4,800 per sq ft.

Rodeo Drive
The two-mile long Rodeo Drive, in Beverly Hills, is one of the world’s premier luxury shopping areas © Leeds Fotografica/Alamy 

In this famously car-centric city, it’s notable too that the “walk score” of properties — their proximity by foot to grocery stores, restaurants and public transport — is becoming increasingly prized. MacArthur Park ranks most highly for walkability, followed by Central Hollywood and Downtown, according to Walkscore.com.

“I don’t drive and I think nothing of walking 30-40 minutes, which friends think is crazy. But where I live in West Hollywood, everything is within easy walking distance,” says Miles Harris, a public relations agent who migrated from London to LA just before the pandemic.

Harris may still be in the minority in rejecting car culture altogether, but small neighbourhoods such as Highland Park and nearby Eagle Rock in north-east LA are gaining in popularity as, post-pandemic, people embrace the “15-minute city” lifestyle. The median listing price in Highland Park has increased 13 per cent in the past 12 months to $995,000, according to Realtor.com. The median sale price in September was above that, at $1.1m.

“These further-out areas are becoming the next Abbot Kinney — which is the hipster place to be in Venice, with its mile-long stretch of restaurants, shops and galleries,” says Thierry.

Coronavirus has also left a more problematic legacy, however, which is the high number of homeless encampments that now sprawl across car parks and freeway bridges throughout the city — the result of huge job losses during the pandemic. Rising crime is another issue that locals mention.

“Many people have the Citizen app, which gives you real-time alerts on crimes being committed nearby,” says Miles Harris. “I have been primarily based in West Hollywood and Beverly Hills and have seen a spike in muggings and robberies.”

For some, rising crime is enough to persuade them to leave LA for the South Bay area further down the coast. Earlier this year, Rachel Maher, who runs a public relations company, moved 18 miles south from Santa Monica to Manhattan Beach — where the median house price has risen 14 per cent in a year, according to CARETS, Southern California’s real-estate database.

“I loved [Santa Monica] but didn’t feel safe there any more — and the riots in 2020 turned many people away,” she says. Now, she’s seeing a feeding frenzy for property in her new beachside hometown, where house prices start at around $1.2m. “People are basically walking the streets asking current owners if they can buy them out of their homes,” says Maher.

They may come in search of the California sun. But housebuyers in LA right now could find the heat more than they hoped for.

Buying guide

LA is home to 583,000 millionaires — more than Hong Kong or Singapore.

Super-prime sales (those priced above $10m) increased 26 per cent year-on-year in 2020, with 155 properties transacting at this level last year, according to Knight Frank.

In the Los Angeles core — which takes in West Hollywood, Beverly Hills, Century City/Westwood and Sunset Strip/Hollywood Hills West — the highest price rises in the luxury condo market were for properties that sold for $1.5m-$5m, at an average of $956 per sq ft, up 7.6 per cent year-on-year, according to Compass.

What you can buy for . . . 

$3.479m A three-bedroom, Spanish Colonial-style family home in Silver Lake built around 1928. The property, which is arranged over three floors and measures 2,899 sq ft, has five bathrooms and offers sweeping views of the LA skyline. Available through Sotheby’s International Realty.

$10m A three-bedroom, three-bathroom penthouse condo on Avenue of the Stars in Century City. The property, which measures 3,169 sq ft, is known as the Barbie Penthouse because it was once owned by Barbara Segal, the inspiration for the doll. Available through Douglas Elliman.

$13.5m A three-bedroom, three-bathroom condo at Pendry in West Hollywood. The property, which has 2,827 sq ft of interior space and a 2,188 sq ft terrace, is among 40 serviced apartments at the new development. Available through PowerPlay Destination Properties.

Pendry 803, $13,500,000 USD.

Follow @FTProperty on Twitter or @ft_houseandhome on Instagram to find out about our latest stories first





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.